STOCKS
Global equities have bounced but need to see if they can sustain higher. Dow and DAX have key resistances ahead which need to be broken to turn the sentiment positive and negate the chances of any further fall. Nikkei is retaining its sideways range and can move up within it now. Sensex and Nifty have crucial supports coming up that needs to hold in order to produce a bounce and avoid any further sharp fall ahead of the Union Budget on Saturday (01-Feb-2020).
Dow (28722.85, +187.05, +0.66%) has bounced yesterday but may face resistance in the 28800-28850 region and then around 29000. It will have to be seen if the index can sustain higher and gain strength. A strong rise past 29000 is much needed to negate the chances of seeing a fall to 28000-27750 that we had mentioned yesterday.
DAX (13323.69, +118.92, +0.90%) has bounced from the low of 13163 yesterday . The support at 13200 mentioned yesterday is holding for now. But the index may face resistance at 13400. A strong rise past 13400 is needed to bring back the bullishness and avoid the fall to 12980 mentioned yesterday.
Nikkei (23327.77, +112.06, +0.48%) is holding above 23000 and has bounced. The broad 23000-24100 range seems to be holding well now. While it manages to sustain above 23000, a further rise to 23500-23600 can be seen in the near-term. A strong rise past 23600 will then pave way for 24000-24100.
Nifty (12055.80, -63.20, -0.52%) fell further in line with our expectation towards 12000. A crucial support is at 11980 which will need a close watch. While this support holds, a bounce to12100-12200 is possible ahead of the Union Budget on Saturday (01-Feb-2020). But a break below 11980 will be bearish to see 11900-11850 on the downside.
Sensex (40966.86, -188.26, -0.46%) has a crucial support at 40670 which needs to hold in order to produce a bounce-back move to 41500 again. A break below 40670 will see the index targting 40000 on the downside.
Shanghai (2976.53) is closed for the Chinese New Year holidays and will reopen on Friday (31-Jan-2020).
COMMODITIES
Some recovery is seen in the commodity sector as crude prices have moved up a bit and precious metals see some corrective dip from higher levels seen in the last 2-sessions. Copper is yet to see a corrective pull back but could soon see a bounce from current levels or from levels slightly lower.
Gold (1565) could not sustain a rise above 1580 and instead has dipped back to lower levels. However, while above immediate support near 1540, we may expect some range trade in the 1540-1580 region with a possible fall towards 1540 in the coming sessions.
Silver (17.44) is holding below 18.50 and while that holds, we may expect prices to fall further towards 17.25/30 or maybe even lower in the near term. Below 17.50, there is enough room on the downside towards 16.50-16.00 in the medium term. View is bearish while below 18.50.
Brent (60.14) and Nymex WTI (54.03) have recovered from lower levels seen in the last 2-sessions. A corrective bounce is likely to be in place for the near term. Immediate upside targets are likely to be 62 for Brent and 54 for WTI which may then extend upwards to 64 and 56 respectively in the medium term. Overall near term view for crude prices look bullish from current levels.
Copper (2.5950) is trading below 2.60 and needs to move back to higher levels to avoid a possible fall towards 2.55/50 in the near term. The bearish momentum seems to be intact but we may not expect a further fall below 2.55/50 within the current move. A corrective bounce is likely to come in soon possibly tomorrow or in the early sessions next week.
FOREX
Dollar Index (98.02) has risen and is trading above 98 just now. The index moved higher ahead of the consumer confidence data yesterday and the FOMC meeting scheduled tonight. A further upmove from here could take it higher towards 98.25/35 on the upside.
Euro (1.1015) has dipped as the US Dollar strengthened. A break below 1.10 is needed to expect a possible extension of the fall towards 1.09 or lower in the medium to long term. Watch price action near 1.10.
Dollar-Yen (109.20) rose back from 108.70 pulled by a stronger US Dollar and moved up to levels above 109. This bounce is likely to be limited to 109.50 just now before another fall towards 109 or lower could be expected.
EURJPY (120.29) has risen a bit and could rise towards 121 if the price continues to rise in the near term. A rejection from 121 could be expected thereafter. While below 121, view for EURJPY remains bearish.
Pound (1.3016) has fallen further. A break below immediate support at 1.30, if seen would turn bearish for Pound towards 1.28 in the medium term. Watch price action near 1.30.
Aussie (0.6764) looks bearish with a possible test of 0.67-0.6650 on the downside before bouncing back from there. While below 0.68, view is bearish for the near to medium term.
Dollar-Rupee (71.3350) turned lower post the onshore trading session yesterday and came off to test 71.20 on the downside. Note that 71.20 is an important levels and a possible bounce from here could take it higher towards 71.50 again in the near term. A lower USDINR below 71.20 if seen could eventually drag it down to 71. Watch price action near 71.20 on sessions opening for clarity on near term direction.
INTEREST RATES
The US Treasury Yields have bounced after the strong US consumer confidence data release yesterday. However, the upside is likely to be capped as key resistances are ahead. The US Fed meeting is due tonight where the central bank is likely to keep the rates unchanged. The German yields are stable and need to wait and watch if they can gain strength to bounce-back from current levels and avoid further fall. The 10Yr GoI has bounced yesterday but need to see if it can surpass 6.60% today or not.
The US 2Yr (1.46%), 5Yr (1.47%), 10Yr (1.65%) and 30Yr (2.10%) has bounced slightly but is unlikely to sustain higher as key resistances are ahead. The 30Yr has an immediate resistance at 2.14%-2.15% and much stronger one at higher levels near 2.23%. The 10Yr has resistances at 1.70% and 1.75%. While the chances of testing these resistances cannot be ruled out, a break above the higher resistances (2.23% on the 30Yr and 1.75% on the 10Yr) is unlikely and the yields can reverse lower again to keep our bearish view intact.
The German 2Yr (-0.63%), 5Yr (-0.60%) and 10Yr (-0.34%) yields remain stable while the 30Yr (0.17%) has inched slightly higher. . We will have to wait and watch if the yields gather momentum and move further higher. The 10Yr has to rise past -0.10% and the 30Yr need to break above 0.20% in order to bring back the bullishness and negated the chances of the fall to 0.08%-0.07% (30Yr) and -0.50% (10Yr) mentioned yesterday.
The 10Yr GoI (6.5796%) has bounced yesterday and need to be seen if it can breach 6.60% today or not. A break above 6.60% will take it further higher to 6.625% and reduce/delay the chances of seeing 6.51% on the downside that we had mentioned yesterday. However, a strong rise past 6.625% is needed to completely negate the chances of seeing 6.51% on the downside.
